Correlation Between EAT WELL and Global Payments

Can any of the company-specific risk be diversified away by investing in both EAT WELL and Global Payments at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining EAT WELL and Global Payments into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between EAT WELL INVESTMENT and Global Payments, you can compare the effects of market volatilities on EAT WELL and Global Payments and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in EAT WELL with a short position of Global Payments. Check out your portfolio center. Please also check ongoing floating volatility patterns of EAT WELL and Global Payments.

Diversification Opportunities for EAT WELL and Global Payments

0.0

Correlation Coefficient

EAT WELL  Global Payments

Pay attention - limited upside

The 3 months correlation between EAT and Global is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding EAT WELL INVESTMENT and Global Payments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Payments and EAT WELL is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on EAT WELL INVESTMENT are associated (or correlated) with Global Payments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Payments has no effect on the direction of EAT WELL i.e., EAT WELL and Global Payments go up and down completely randomly.

Pair Corralation between EAT WELL and Global Payments

If you would invest  9,002  in Global Payments on September 30, 2024 and sell it today you would earn a total of  1,883  from holding Global Payments or generate 20.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

EAT WELL INVESTMENT  vs.  Global Payments

EAT WELL INVESTMENT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EAT WELL INVESTMENT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, EAT WELL is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Global Payments

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global Payments are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Global Payments reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EAT WELL and Global Payments

The main advantage of trading using opposite EAT WELL and Global Payments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EAT WELL position performs unexpectedly, Global Payments can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Global Payments will offset losses from the drop in Global Payments' long position.

The idea behind EAT WELL INVESTMENT and Global Payments pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.